SHRI MADHO LAL SAINI,JAIPUR vs. ITO, WARD-2(3), JAIPUR

decide all these appeals by this combined order for the sake of convenience. We first take up the appeal in as lead case and the decision arrived at will be applicable for other appeals. The grounds raised by the assessees are as under :-

ITA NO. 238/JP/2020 :

1. In the facts and circumstances of the case and in law, ld. CIT(A) has erred in confirming the action of Id. AO in reopening the case u/s 147. The action of Id. CIT (A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the reassessment proceedings.

2. In the facts and circumstances of the case and in law Id. AO has erred in re- opening the case of the assessee by issuing notice under section 148 of the Income Tax Act 1961, being not in accordance with the provisions of Section 151 of Income Tax Act 1961. The action of the ld. AO is illegal, unjustified and arbitrary and against the facts of the case. Relief may please be granted by quashing such re-assessment proceedings. 3. In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of ld.. AO of disallowing deduction u/s 54B and, thereby, computing capital gains at Rs. 63,95,407. The action of the ld. CIT (A) is illegal, unjustified and arbitrary and against the facts of the case. Relief may please be granted by quashing the disallowance and deleting the said addition of Rs.63,95,407.

4. In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of Id. AO of making addition of Rs. 4,24,14,300 u/s 69. The action of the ld. CIT (A) is illegal, unjustified and arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 4,24,14,300.

5. In the facts and circumstances of the case and in law the ld. AO has erred not providing the copies of the material. statements, relevant documents, etc used against the assessee for making addition of Rs. 4,24,14,300 u/s 69. The action of the ld AO is illegal, unjustified and arbitrary and against the principles of natural justice. Appropriate relief may please be granted.

6. The assessee craves his right to add, amend, or alter any of the grounds on or before the hearing.” :

2. That the CIT (A) has grossly erred in upholding the validity of re- assessment proceedings. 3. That the assessment order dated 09.03.2015 is per se illegal arbitrary and in violation of principals of natural justice. 4. That the CIT (A) has grossly erred in upholding the addition of Rs. 15,00,000 by rejecting the deduction under section 54F in respect of investment in immovable property claimed on the basis of undisputed valuation report of the registered valuer. 5. That the CIT (A) has grossly erred in upholding the rejection of claim of Rs. 36,70,000 under section 54B/54F holding that agricultural land (investment) was purchased (made) after the due date of filing return of income under section 139(1).”

ITA NO. 06/JP/2021 :

1. In the facts and circumstances of the case and in law, ld. CIT(A) has erred in confirming the action of d. AO in reopening the case u/s 147. The action of d. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the reassessment proceedings.

2. In the facts and circumstances of the case and in law, ld. AO has erred in reopening the case of the assessee, by issuing notice under section 148, of the Income Tax Act 1961, without taking proper approval of the relevant authority, in accordance with Section 151.The action of ld. AO is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the reassessment proceedings.

3. In the facts and circumstances of the case and in law, ld. CIT (A) has erred, in confirming the action of ld. AO, by not allowing the claim u/s 54B and, thereby, computing Capital Gains at Rs. 19,92,602. The action of Id. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by allowing the claim of the assessee made u/s 54B and deleting the said addition of Rs. 19,92,602.

4. In the facts and circumstances of the case and in law, ld. CIT(A) has erred in rejecting the plea of the assessee, of the land sold by the assessee, during the relevant previous year, being an agricultural land outside the purview of Capital Asset, as defined u/s 2(14) of the Income Tax Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the addition, on account of Capital Gains, as made by the Id. AO and sustained by ld. CIT(A).

5. In the facts and circumstances of the case and in law ld. CIT (A) has erred in confirming the action of ld. AO of making the addition of Rs. 67,98,375 u/s 69. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 67,98,375.

6. In the facts and circumstances of the case and in law the Id. AO has erred not providing the copies of the material, statements, relevant documents, etc used against the assessee for making addition of Rs. 67,98,375 u/s 69. The action of ld. AO is illegal, unjustified, arbitrary and against the principles of natural justice. Appropriate relief may please be granted.

7. The assessee craves his right to add, amend, or alter any of the grounds on or before the hearing.”

ITA NO. 238/JP/2020 A.Y. 2007-08.

Assessee also purchased agriculture lands subsequent to the aforementioned sale, the details of which are as under :-

Property Date of Purchase Registry Total PB situated at purchase consideration charge Gram 27.09.2006 37,50,000 2,67,950 40,17,950 32-40 Badanpura, 11.10.2006 39,97,000 2,84,010 42,81,010 41-50 Tehsil : 18.03.2009 51,90,000 4,28,240 56,18,240 51-59 Amer 18.03.2009 41,40,000 3,49,840 44,89,840 60-68 Total 1,70,77,000 13,30,040 1,84,07,040 Subsequently, a search and seizure operation was conducted on Shri Madan Mohan Gupta on 23-05-2013 by the Investigation Wing, Jaipur of the Income Tax Department. During the course of search and seizure operation on Shri Madan Mohan Gupta, a diary including various incriminating documents were found and seized. Statement of Shri Madan Mohan Gupta was recorded on 23-05-2013 and 27-05-2013. In respect to some notings found in Diary was seized from the possession of Shri Madan Mohan Gupta. The diary allegedly contained dealings in respect of certain properties purchased by the assessee. Shri Madan Mohan Gupta during the course of recording the statement stated that the details mentioned of page no. 21 to 25 of Exhibit-1 of Annexure-AS are related to the land purchase/land sale transaction of Shri Madho Lal, Shri Kanhaiya Lal and Shri Shankar Lal.

Thereafter, the case of the assessee was reopened, pursuant to the search conducted on Shri Madan Mohan Gupta and notice under section 148 was issued to the assessee. Pursuant to such notice issued, assessee filed his return of income declaring total income of Rs. 1,80,544/-.

2.1 Shri Madan Mohan Gupta nowhere in his statements recorded on 23.05.2013, solely on the basis of which the reopening was done, mentioned the fact of assessee having purchased land by paying amount in cash over and above that mentioned in the respective deed. Question no. 21 of the statements of Shri Madan Mohan Gupta on 23.05.2013 as has been relied upon by the ld. AO does not, in any way, relate to the transaction undertaken by the assessee. Merely on the basis of such information, AO reopened the case of the assessee, without having any other corroborative evidence or without recording any satisfaction of ‘on money’ in the form of cash having been paid by the assessee for purchase of the properties. The AO by issuing notice under section 148 of the IT Act proposed to assess the ‘on money’ payment made by the assessee for purchase of lands as found in the statement of Shri Madan Mohan Gupta as recorded under section 132(2) of the IT Act in search and seizure proceedings carried out on 23.05.2013 and thereafter the statement of Shri Shankar Lal Saini and Shri Kanhiya Lal Saini were also recorded on 05.08.2013. The AO completed the assessment under section 144/147 of the IT Act by making additions of Rs. 4,24,14,300/- on account of undisclosed cash payment and Rs. 63,95,407/- on account of undisclosed long term capital gain in purchase / sale of land. The assessee challenged the action of the AO before the ld. CIT (A) and also challenged the validity of reopening of the case of the assessee. Before ld. CIT (A) it was submitted that the land sold by the assessee was an agricultural land and accordingly was not chargeable to tax. In this regard, evidences were submitted to the ld. CIT (A) establishing location of the land and also the fact of the land being utilized for the purpose of agricultural activities before its sale. Such evidences were submitted before the ld. CIT (A) as part of additional evidences, which were accepted by the ld. CIT (A) and remand report was obtained from the AO. However, the ld. CIT (A) rejected the contention of the assessee for the reason that the assessee himself while filing the return of income, pursuant to the notice issued under section 148 had himself declared capital gain on sale of the land.

Now the assessee has filed appeal before us.

Ground nos. 1 & 2 are inter-connected and inter-related and challenging the validity of reopening of the case of the assessee under section 147 read with section 148 being not in accordance with the provisions of section 151 of the IT Act.

“1.1. As regards the reopening done by the ld. AO, elaborate submissions were made before ld. CIT(A), which have been reproduced by her at Page No. 4 and 5 of her order. Such submissions may please be considered in correct perspective. Further, the below mentioned submissions may also be considered.

1.2. Ld. AO solely on the basis of the information received from DDIT (Inv.) III, Jaipur of the search having been conducted by the Department on Shri Madan Mohan Gupta, reopened the case of the assessee for the relevant previous year.

1.3. Sole basis of the ld. AO in reopening the case of the assessee, for the relevant previous year, was the search conducted on Shri Madan

Mohan Gupta. According to the ld. AO, as per the information received by him, Shri Madan Mohan Gupta at the time of answering Question No. 21 of the statements recorded on 23.05.2013, submitted that the details mentioned at Page Number 21 to 25 were related to the land purchased/sold by the assessee. [PB : 4]

1.4. Shri Madan Mohan Gupta nowhere in his statements recorded on 23.05.2013, solely on the basis of which the reopening was done, mentioned the fact of assessee having purchased land by paying amount, in cash, over and above that mentioned in the respective deed. Question No. 21 of the statements of Shri Madan Mohan Gupta on 23.05.2013 as has been relied upon by the ld. AO does not, in any way, relate to the transaction undertaken by the assessee. Snapshot of Q.No. 21 [PB : 134] is set out here under for the sake of ready reference.

1.5. Merely on the basis of such information ld. AO reopened the case of the assessee, without having any other corroborative evidence or without recording any satisfaction of ‘on money’, in the form of cash, having been paid by the assessee for purchase of the properties.

1.6. For the proposition, that no reopening can be done merely on the basis of information received from the Investigation Wing, as the same cannot be considered as a tangible material, warranting reopening, reliance is placed on the following judicial pronouncements-

1.6.1. SFIL Stock Broking Ltd. [2010] 325 ITR 285 (Delhi) 1.6.2. Insecticides (India) Ltd. [2013] 357 ITR 330 (Delhi) 1.6.3. Krown Agro Foods (P.) Ltd. [2015] 375 ITR 460 (Delhi) 1.6.4. RMG Polyvinyl (I)B Ltd. [2017] 83 taxmann.com 348 (Delhi) 1.6.5. Meenakshi Overseas Pvt. Ltd. [2017] 395 ITR 677 (Delhi)

1.7. In the case of Manzil Dinesh Kumar Shah [2018] 406 ITR 326 (Gujarat), the High Court, at Para 7-8, held that even the assessment which is completed u/s. 143(1) cannot be reopened without proper ‘reason to believe’. If the reasons state that the information was received from any department, then such aspects “needed deep verification”. Otherwise, it is to be considered that AO reopened the case for doing ‘fishing or roving inquiry’ without proper reason to believe, which is not permissible. Special Leave Petition, filed by the Department, against the aforementioned judgment of the Gujarat High Court, was dismissed by the Hon’ble Supreme Court, vide order dated 4.01.2019 [2019] 101 taxmann.com 259 (SC).

1.8. Hon’ble jurisdictional High Court of Rajasthan, in the case of Sandeep Stocks Pvt. Ltd., in Civil Writ Petition No. 16705/2018, held that no reopening can be done only on the basis of information received from the Investigation Wing. It was held that the reasons recorded by the Assessing Officer cannot in any way be vague.

1.9. The words “reason to believe” suggests that the belief must be that of an honest and reasonable person based upon some tangible material and that the ld. AO may act on direct or circumstantial evidence but not without the same. Reason to believe is not the same thing as reason to suspect. The ratio has been laid down by a plethora of judgments some of which have been mentioned below:-

1.9.i Indian Oil Corpn. v ITO (1986) 159 ITR 956 (SC) 1.9.ii Manikonda Venkata Narasimham v CIT (1960) 39 ITR 575 (AP) 1.9.iii Adarsh Chemicals and Fertilizers v IAC (1995) 212 ITR 185 (Guj.)

1.10. It reiterated that the sole basis, emerging out of the reasons recorded, of reopening the case of the assessee was the incriminating documents found during the course of search on the premises of Shri Madan Mohan Gupta.

1.11. Reassessment pursuant to material found in search can be done through recourse to section 153C only and not by invoking the provisions of section 147/148.

1.12. The provisions of section 153C are over-riding in nature and contain non obstante clause for sections 139,147,148,149,151 and 153.

1.13. Section 147 and 153C are not interchangeable but are mutually exclusive sections. It is not the choice of the revenue to invoke either of the two sections at its whims. The scope of the two sections has been legislated differently with a definitive purpose. 1.14. For the above ratio reliance is placed on the following judicial pronouncements:- 1.14.i Arun Kumar Kapoor [2011] 140 TTJ 249 (Amritsar) 1.14.ii G. Koteswara Rao [2015] 64 taxmann.com 159 (Visakhapatnam - Trib.) 1.14.iii Rajat Shubra Chatterji, ITAT Delhi Bench

1.15. The above mentioned judgments have been followed by the Hon’ble ITAT, Jaipur Bench, in the case of Shri Navrattan Kothari, in [Order Dated 13.12.2017], wherein under identical set of facts the entire re-assessment proceedings were quashed. Ld.

CIT(A) in his order at Page 7 has relied upon the decision of Hon’ble ITAT, Ahmedabad Bench in the case of Shailesh S Patel [2018] 97 Taxmann.com 570 (Ahm – ITAT)], ignoring the legal position that jurisdictional ITAT had already passed order upholding the same legal position, in the case of Navrattan Kothari (Supra).

In view of the above, reopening done by the ld. AO is illegal and deserves to be quashed.”

Property Date of Purchase Registry Total PB situated at purchase consideration charge Gram 27.09.2006 37,50,000 2,67,950 40,17,950 32-40 Badanpura, 11.10.2006 39,97,000 2,84,010 42,81,010 41-50 Tehsil : 18.03.2009 51,90,000 4,28,240 56,18,240 51-59 Amer 18.03.2009 41,40,000 3,49,840 44,89,840 60-68 Total 1,70,77,000 13,30,040 1,84,07,040 Subsequently, a search and seizure operation under section 132 of the IT Act, 1961 was conducted on Shri Madan Mohan Gupta on 23-05-2013 by the Investigation Wing, Jaipur of the Income Tax Department. During the course of search and seizure operation on Shri Madan Mohan Gupta, a diary including various incriminating documents were found and seized. During the course of search and seizure action, statement of Shri Madan Mohan Gupta was recorded, who had explained the various documents found and seized during the search operation. The AO reopened the case of the assessee and initiated proceedings after approval by the Additional Commissioner of Income Tax, Range-2, Jaipur vide letter dated 27.03.2014. Consequently the AO while initiating proceedings under section 148 recorded following reasons under section 147 of the Act :-

“Reason u/s 148 in the case of Shri Madho Lal Saini for A.Y. 2007-08

Information received from DDIT (Inv)-III, Jaipur during the course of search operation at the business premises of Shri Madan Mohan Gupta at A-30, Saraswati Colony, Sanganer, Jaipur while answering Q. No 21 of this statement dated 23/05/2013, he submitted that the details mentioned of page No.21 to 25 of exhibit-1 of annexure-AS are related to the land purchase/land sale transaction of Shri Kanhaiya Lal, Shankar Lal and Shri Madho Lal. Therefore information was obtained from Raj Stamps, according to while Shri Madho Lal Saini, Shri Shankar Lal Saini and Shri Kanhaiya Lal Saini had purchase/sold land on various dated. Accordingly, to this information, Shri Madho Lal Saini S/o Shri Nanu Ram has sold agriculture land at village- Jaisinghpura, Bankrota for a sale consideration of Rs. 2,07,80,000/- on 01/09/2006. The land has is situated within 8 Kms. of municipal limits and thus, the land sold by the assessee falls within the ambit of the definition of capital asset in terms of provisions of section 2(14) of the Income Tax Act, 1961 and accordingly, the capital gain arising on sale of this land is chargeable to tax. However, the value of this property was taken at Rs. 2,07,80,000/- for the purpose of Stamp Duty. The details of purchase value of the land has not been mentioned in the deed available. Thus, the sale proceeds to the extent of Rs. 2,07,80,000/- is chargeable to tax as LTCG. Shri Madho Lal S/o Shri Nanu Lal purchase land at Village-Badanpura, Tehsil- Amer vide sale deed dated 27/09/2006 and 11/10/2006 from Shri Kanha Ram, Shri Lala Ram, Shri Nand Ram, Shri Kalu Ram of Village Bhurthal for Rs.77,47,000/-. The description is Khasra No.100,102,132,133,142,129 as per sale deed dated 27/09/2006 total area of this land is 4.68 hector. As per sale deed dated 11/10/2006 assessee has purchase land from above mentioned persons Khasra No.99,100,115,128,143 total land area 4.87 hector. As per page No.25 seized from Shri Madan Mohan Gupta in which detail of total payment was mentioned as under:-

Name of the seller Cash payment Cheque payment Registration Exp. Shri Kanha Ram, Rs. 4,24,14,300/- Rs. 77,47,000/- Rs. 5,53,960/- Shri Lala Ram, Shri Nand Ram, Shri Kalu Ram Land 9.55 Hector

As per statement of Madan Lal Gupta stated that on page No. 25 are related to purchase of lands by Shri Kanhaiya Lal, Shri Shankar Lal and Shri Madho Lal. Shri Kanahiya Lal Saini in his statement dated 05/08/2013 accepted all the transactions mentioned in the table except cash payment. It is crystal clear when the assessee accepting the all transaction the cash payment is also made by him. The cash payment of Rs. 4,24,14,300/- was made from undisclosed income. As per provisions of section 139(1) of the Income Tax Act, 1961 every person shall furnish a return of this income on or before the due date in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. The basis income exempt to tax during the year under consideration in the assessee's case is Rs. 1,00,000/-. However, as per AST data base, the assessee has not filed his return of income for the year under consideration. As per provisions of clause (a) of Explanation 2 below section 147 of the Income tax Act, 1961; where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income tax; shall also be deemed to be income chargeable to tax which has escaped assessment. In view of above, I have reason to believe that the income to the extent of Rs. 6,31,94,300/- has escaped assessment within the meaning of section 147 of the I.T. Act, 1961. Therefore, I am satisfied that it is a fit case for issuing notice u/s 148.”

Thus the Assessing Officer has proceeded on the premises that the assessee along with his two sons Shri Shankar Lal Saini and Shri Kanhiya Lal Saini had invested the money in purchase of land as aforesaid. The diary found from the possession of Shri Madan Mohan Gupta allegedly contained dealings in respect of certain properties purchased by the assessee along with his two sons, namely Shri Shankar Lal Saini and Shri Kanhiya Lal Saini. The details recorded in the seized diary found from Shri Madan Mohan Gupta revealed the payment of cash in respect of the land purchased by Saini family members i.e. father and sons. The statement of Shri Madan Mohan Gupta was recorded by Investigation Wing in which he has explained the transactions of land purchased by Saini family members. The department also recorded the statements of Shri Shankar Lal Saini and Shri Kanhiya Lal Saini and in their statements they have accepted the said transaction of purchase of land as it was through registered sale deeds but they have specifically denied any payment of cash over and above the purchase consideration shown in the respective sale deeds through cheques. Therefore, in the search and seizure proceedings and in the subsequent investigation what was detected by the Department is the seized material containing the transaction of land purchased by Shri Madho Lal Saini, Shri Shankar Lal Saini and Shri Kanhiya Lal Saini all family members. Since, some cash payment was recorded in the seized material, therefore, the Assessing Officer of the assessees before us took a view that the alleged cash payment was made by these Saini family members in purchase of the land by the assessee and his two sons, though the assessee and his two sons have stated in their statements that the payment was made through banking channel and denied any cash payment. The AO has assumed the payment of cash only on the basis of some transactions recorded in the seized material regarding the payment of cash by the assessee and his two sons in respect of purchase of land and the source of which is assumed as sale consideration received from sale of land by the assessee on 01.09,2006. It is pertinent to note that the alleged seized material contains nothing regarding any transaction between the seller of the land, supra, and Saini family members and the entries found in the seized material are confined only to the purchase of land by Saini family members. Therefore, the seized material itself does not reveal any transaction of payment of cash by the assessee in respect of purchase of land from the sellers, supra. Further, in the statement of Shri Madan Mohan Gupta nothing incriminating was disclosed against the assessee but he has explained the nature of transactions recorded in the seized material regarding the purchase of land by the assessee and his two sons Shri Shankar Lal Saini and Shri Kanhiya Lal Saini. The department then also conducted further inquiry by recording statements of Shri Shankar Lal Saini and Shri Kanhiya Lal Saini and specifically asked the question regarding the payment of cash but both these brothers have denied the payment of cash in respect of the land purchased by them. Therefore, even if the seized material along with the statements of Shri Madan Mohan Gupta and Saini family members are taken into consideration nothing has come out to be regarded as any incriminating material or fact to reveal any cash payments by the assessee for purchase of lands in question. The addition made by the AO is solely on his own presumption of payment of cash without any tangible material or evidence in support of his decision. When the seized material found from Shri Madan Mohan Gupta as well as other material gathered during post search inquiry has not established any direct or proxy connection with the transaction of purchase of land by the assessee then the assumption and presumption of the AO that the assessee might have paid cash over and above the consideration shown in the sale deeds is only surmises and conjectures. We note that the Assessing Officer of the assessee, while framing the assessment under section 144 read with section 147 of the Act dated 18.03.2015 accepted the sale consideration as recorded in the sale deeds for the purpose of the assessing the capital gain. The AO, however, made additions on account of unexplained investment by them on account of cash payment reflected in the seized material. Therefore, the AO has not disturbed the sale consideration received by the assessee and his two sons in respect of sale of land. Accordingly, when the transaction of sale of land and sale consideration is accepted by the AO of the Saini family members as recorded in the sale deeds then the addition made by the AO on account of cash payment by the assessee u/s 69 of the Act has no legs to stand in the absence of any incriminating material but the said addition is merely based on assumption of the A.O.

We further note that an identical issue of reopening of the assessment in the case of Shri Navrattan Kothari Vs. ACIT in has been considered and decided by this Tribunal vide order dated 13/12/2017 in paragraphs No. 6 and 7, which is reproduced as under:

“ 6. We have considered the rival submissions as well as relevant material on record. The matter revolves around the transaction of purchase and sale of land situated at Village Chainpura, Tehsil Sanganer (behind of Entertainment Paradise) Jaipur. The said land was purchased by M/s Shri Kalyan Buildmart Pvt. Ltd. on 24.08.2006. Thereafter the assessee purchased 8,000 shares M/s Shri Kalyan Buildmart Pvt. Ltd. from Shri Madan Mohan Gupta and his wife Smt. Shashi Kala Gupta. There is no dispute that this transfer of purchase of shares of M/s Shri Kalyan Buildmart Pvt. Ltd. was dully reflected in the books of accounts as on 31.03.2008 and also brought before the Assessing Officer in the course of initiation assessment completed u/s 143(3) r.w.s. 153A on 31.03.2013. Thereafter the AO proposed to reopen the assessment to assess the consideration paid by the assessee for alleged purchase of land by issuing notice u/s 148 on 25.03.2014. The AO recorded the reasons for reopening of the assessment as reproduce at page 4 of the assessment order are as under:-

“During the course search and seizure operation in the case of Rajendra Jain Group DOS 23-05-2013 and survey proceedings at the business premises of Shri Madan Mohan Gupta, certain incriminating documents were found and seized which were inventories as Exhibit 1 to 5 of Annexure-AS and Exhibit 1 to 8 of Annexure- A. The documents found and seized from the residence and business premise of Shri Madan Mohan Gupta during the course of search proceedings revealed that on various page of Exhibit- 1,2 & 5 of Annexure-A as well as Exhibit-1 of Annexure-As, some date wise amounts have been written in the name of ‘KGK’. These transactions noted on page no. 28,43,69 and 73 of Exhibit-1 of Annexure-A total up to Rs. 14,24,12,650/-. The assessee has failed to satisfactorily explain the transactions recorded on this page. I have thus reason to believe that income to the extent of Rs. 14,24,12,650/- has escaped assessment within the meaning of section 147of the I.T. Act, 1961.”

Thus, it is clear that the basis of reopening of the assessment is the seized material found during the course of search and seizure operation in the case of Rajendra Jain Group and the statement of Shri Madan Mohan Gupta recorded u/s 132(4) and 131 of the Act. The Assessing Officer analyzed the statement and the seized material for his satisfaction as recorded in paras 4 and 5 of the assessment order as under:-

“4. In his statements, recorded during the course of search/post search proceedings, Shri Madan Mohan Gupta submitted that the following pagers of various exhibits are related to land transactions at Chainpura behind Entertain Paradise, Jaipur.

Sr. Annexure No. & Page No. Found/seized from Exhibit No. 1 Annexure A Exhibit-1 15 to Residential premises 24,27,38,43,44, and 69 to 74 2 Annexure A Exhibit-2 47 and back Residential premises side of 48, 50 to 54 3 Annexure A Exhibit-5 1 to 77 Residential premises 4 Annexure AS Exhibit- 1 to 3,7,9,10 Office premises 1

5. Further in the statements of Shri Madan Mohan Gupta, he submitted that on the above page, details w.r.t. a land transactions at Village chainpura behind entertainment Paradise, Jaipur has been recorded which was purchase by Shri Rajendra Kumar Jain resident of D-25, Lal Bahadur nagar, Jaipur, through him i.e. Shri Madan Mohan Gupta. The deal was finalized at Rs. 12,43,27,000/- out of which discount of Rs. 1% was allowed for registration of land. Therefore, Rs. 13,30,84,000/- were net payable to the seller and the details of the same have been recorded on page No. 15-18 of Exhibit-1 of Annexure-A, found and seized from his residence. Later on this land was sold to Shri K.G. Kothari. Shri Madan Mohan Gupta further submitted that this land was purchased in the name of M/s Kalyan Buildmart Pvt. Ltd. in which he was a director along with hiswife Smt. ShashiKala Gupta. This land was purchased during the year 2006-07 and sold to K G. Kothari, Prithviraj Road, C-Scheme, Jaipur and Shir vimal Chand Surana in the month of March, 2007 and the details of the same have been recorded on page Nos. 27 & 28 of Exhibit of Annexure-A. During the course of statement, Shri Madan Mohan Gupta admitted that the amounts mentioned against dates have been recorded in coded form such as Rs. 1.00 crore have been written as 1=00 and Rs. 50.00 lacs have been written as .50. This sale transactions were finalized for Rs. 20,83,39,232/- and the payments to the sellers were made through Shri Rameshwar

Prasad Sharma resident of Barkat Nagar, Tonk Phatak, Jaipur. Shri Madan Mohan Gupta further admitted that he got Rs. 8.00 lacs as his reimbursement from this land transaction.”

Thus it reveals from the assessment order that after the initial assessment u/s 143(3) r.w.s. 153A the AO got the alleged incriminating material in the shape of diary and transactions recorded therein found and seized in the search and seizure operation in case of Rajendra Jain Group. Accordingly, the AO proceeded to reassess the income of the assessee u/s 147 of the Act. The entire decisions of the AO to reassess the income of the assessee is based on the seized material and statement of Shri Madan Mohan Gupta recorded u/s 132(4) of the Act for which the specific remedy is provided u/s 153C of the Act. For ready reference we quote section 153C as under:-

“ 153C. 79[(1)] 80[Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that,— (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, 81belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person] 82[and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person 82a[for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and] for the relevant assessment year or years referred to in sub-section (1) of section 153A] :]

20 728/JP/2019 & 06/JP/2021 Shri Madho Lal Saini and Others. 8 3[Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to 84[sub-section (1) of] section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person :] 8 5[Provided further that the Central Government may by rules86 made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made 86a[and for the relevant assessment year or years as referred to in sub-section (1) of section 153A] except in cases where any assessment or reassessment has abated.] 8 7[(2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year—

(a) no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A.”

This section begins with non-obstante clause and therefore, has an overriding effect on the Sections 147&148 of the Act. As per the scheme and object of Section 153C r.w.s 153A the AO has no discretion or choice to invoke the provisions of Section 147/148 instead of section 153C r.w.s. 153A of the Act. Once the case of reassessment is made out by the AO which falls in the preview of specific provisions of section 153C of the Act, the AO cannot resort to invoke the provisions of Section 147/148 of the Act to assessee or reassess income of the assessee. The action of the AO to initiate the proceedings Under section 147/148 of the Act vitiates the entire reassessment proceedings and the assessment order. Once, the AO is satisfied that the documents seized belong to the persons other than the searched person, the Assessing Officer shall proceed against such other persons and issued notice u/s 153C and assessee or reassess income of such other persons in accordance with the provisions of section 153A of the Act. Therefore, it is mandatory for the AO to proceed u/s 153C if he is satisfied that the seized material reveals the income of such other persons to be assessed or reassessed. The Amritsar Bench of this Tribunal in case of ITO vs. Arum Kumar Kapoor (supra) while deciding an identical issue of validity of initiation of proceedings u/s 147/148 on the basis of seized material has held in paras 7.2 and 8 as under:-

“7.2. The undisputed facts are that a search was conducted under s. 132 of the Act in the case of M/s. Today Homes & Infrastructure (P.) Ltd. on 28th March, 2006, during the course of which certain incriminating documents were allegedly seized. It is also a matter of record that the Dy. CIT, Central Circle-22, New Delhi intimated the AO of the assessee about seizure of certain documents pertaining to the assessee during search and enclosed copy of those documents requesting him to take appropriate action under s. 153C/148 of the Act. It is after that that during the course of appellate proceedings before the CIT(A) the assessee took an additional ground of appeal to the effect that the reassessment proceedings initiated by the AO under s. 148 are illegal and void ab initio. In the instant case, the learned CIT(A) has correctly observed that the AO should have issued notice under s. 153C of the Act and should have framed the assessment under s. 153C r/w s. 153A of the Act. Sec. 153C of the Act reads as under :

"153C. Notwithstanding anything contained in s. 139, s. 147, s. 148, s. 149, s. 151 and s. 153, where the AO is satisfied that any money, bullion or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in s. 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the AO having jurisdiction over such other person and that AO shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of s. 153A."

8. On a perusal of the above provisions, it would be clear that the provisions of s. 153C of the Act were applicable, which supersedes the applicability of provisions of ss. 147 and 148 of the Act. As we have already noted hereinabove that the documents were seized during the search under s. 132 of the Act and the same were sent to the assessee's AO at Amritsar by the officer at Delhi in our view, the learned CIT(A) has correctly observed that only the provision in which any assessment could be made against the assessee in the IT Act was s. 153C r/w s. 153A of the Act. It is also apparent from the record that the officer at Delhi has mentioned in his letter that the necessary action may be taken as per law under s. 153C/148 of the Act. Hence, notice issued under s. 148 of the Act and proceedings under s. 147 of the Act by the AO are illegal and void ab initio. In view of the provisions of s. 153C of the Act, s. 147/148 stands ousted. In the instant case, the procedure laid down under s. 153C has not been followed by the AO and, therefore, assessment has become invalid. We also observe that the CIT(A) was justified in following the ratio laid down by the Hon'ble Supreme Court in the case of Manish Maheshwari v. Asstt. CIT [2007] 289 ITR 341 / 159 Taxman 258 wherein it has been held that if the procedure laid down in s. 158BD is not followed, block assessment proceedings would be illegal. The CIT(A) has correctly observed that the provisions of s. 153C are exactly similar to the provisions of s. 158BD of the Act in block assessment proceedings. Thus, considering the entire facts and the circumstances of the present case, we hold that the CIT(A) was fully justified in quashing the reassessment order. We also do not find any merit in the submissions of the learned Departmental Representative that during the course of search, it was found at premises of M/s. Today Homes & Infrastructure (P.) Ltd. pertaining to M/s. P.R. Infrastructure Ltd. and not the assessee. In this regard, we may point out that the contention raised by the learned Departmental Representative is factually incorrect and contrary to the available records of seized documents specifically mentioned in the assessment order dt. 30th Dec, 2008. In view of the above factual discussion, we do not find any merit and substance in the contention of the learned Departmental Representative. Therefore, we uphold the order of the CIT(A) and dismiss the ground Nos. 1 to 4 of the appeal.”

A similar view was taken by the Visakhapatnam Bench of this Tribunal in case of G. Koteswara Rao vs. DCIT (supra) in para 11 to 17 as under:-

“11. A careful study of section 153A to 153C and also the circular issued by the CBDT explaining the procedure of assessment in search cases, it shows that these are separate provisions independent of other provisions relating to reassessment, because of the non abstante clause begins with the said sections. The language used in these sections, i.e. 'notwithstanding anything contained' in section 139, section 147, section 148, section 149, section 151 and section 153 made it clear that provisions of these sections are not made applicable to the assessments covered by the provisions of section 153A. Prior to the introduction of these three sections, there was a separate chapter XIV -B of the Act, by section 158BC to 158BE which governs the search assessments which is popularly known as Block assessment. The earlier provisions provides for single assessment to be made in respect of undisclosed income of Block period consisting of 10 assessment years immediately preceding the assessment year in which search took place and the broken period of up to the date of search was also included in the block period. After the introduction of new sections, i.e. section 153A to 153C, the single block assessment concept was done way with the new scheme of assessment of search cases where the Assessing Officer is to assess or reassess the total income of each of the assessment years falling within the period of six assessment years immediately preceding the assessment year in which the search is conducted. Therefore, under the new scheme, the Assessing Officer is required to exercise the normal assessment powers in respect of the previous year in which the search took place. From these facts, one thing is clearly emerged that both i.e. earlier concept of Block assessment and the new scheme of assessment is separate provisions created for assessment of search cases where the search is conducted u/s 132 or requisition was made u/s 132A of the Act.

where there is an escapement of income chargeable to tax and section 153A comes in to operation where there is search u/s 132.

287/23 taxmann.com 103 (Mum) (SB). The Special Bench after considering the provisions of section 153A and CBDT circular has held as under:

'52. The provision comes into operation if a search or requisition is initiated after 31.5.2003. On satisfaction of this condition, the AO is under obligation to issue notice to the person requiring him to furnish the return of income of six years immediately preceding the year of search. The word used is "shall" and, thus, there is no option but to issue such a notice. Thereafter he has to assess or reassess total income of these six years. In this respect also, the word used is "shall" and, therefore, the AO has no option but to asses or reassess the total income of these six years. The pending proceedings shall abate. This means that out of six years, if any assessment or reassessment is pending on the date of initiation of the search, it shall abate. In other words pending proceedings will not be proceeded with thereafter. The assessment has now to be made u/s 153A (1)(b) and the first proviso. It also means that only one assessment will be made under the aforesaid provisions as the two proceedings i.e. assessment or reassessment proceedings and proceedings under this provision merged into one. If assessment made under sub-section (1) is annulled in appeal or other legal proceedings, then the abated assessment or reassessment shall revive. This means that the assessment or reassessment, which had abated, shall be made, for which extension of time has been provided under section 153B.

account while making assessment or reassessment of total income under the aforesaid provision. Similar position will obtain in a case where undisclosed income or undisclosed property has been found as a consequence of search. In other words, harmonious interpretation will produce the following results :-

(a) In so far as pending assessments are concerned, the jurisdiction to make original assessment and assessment u/s 153A merge into one and only one assessment for each assessment year shall be made separately on the basis of the findings of the search and any other material existing or brought on the record of the A.O.

(b) in respect of non-abated assessments, the assessment will be made on the basis of books of account or other documents not produced in the course of original assessment but found in the course of search, and undisclosed income or undisclosed property discovered in the course of search."

"18. A perusal of Section 153A shows that it starts with a non obstante clause relating to normal assessment procedure which is covered by Sections 139, 147, 148, 149, 151 and 153 in respect of searches made after 31.5.2003. These Sections, the applicability of which has been excluded, relate to returns, assessment and reassessment provisions. Prior to, the introduction of these three Sections, there was Chapter XIV- B of the Act which took care of the assessment to be made in cases of search and seizure. Such an assessment was popularly known as block assessment because the Chapter provided for a single assessment to be made in respect of a period of a block of ten assessment years prior to the assessment year in which the search was made. In addition to these ten assessment years, the broken period up to the date on which the search was conducted was also included in what was known as block period. Though a single assessment order was to be passed, the undisclosed income was to be assessed in the different assessment years to which it related. But all this had to be made in a single assessment order. The block assessment so made was independent of and in addition to the normal assessment proceedings as clarified by the Explanation below Section 158BA(2). After the introduction of the group of Sections namely, 153A to 153C, the single block assessment concept was given a go-by. Under the new Section 153A, in a case where a search is initiated under Section 132 or requisition of books of account, documents or assets is made under Section 132A after 31.5.2003, the Assessing Officer is obliged to issue notices calling upon the searched person to furnish returns for the six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted or requisition was made. The other difference is that there is no broken period from the first day of April of the financial year in which the search took place or the requisition was made and ending with the date of search/requisition. Under Section 153A and the new scheme provided for, the AO is required to exercise the normal assessment powers in respect of the previous year in which the search took place.

20. A question may arise as to how this is sought to be achieved where an assessment order had already been passed in respect of all or any of those six assessment years, either under Section 143(1)(a) or Section 143(3) of the Act. If such an order is already in existence, having obviously been passed prior to the initiation of the search/requisition, the Assessing Officer is empowered to reopen those proceedings and reassess the total income, taking note of the undisclosed income, if any, unearthed during the search. For this purpose, the fetters imposed upon the Assessing Officer by the strict procedure to assume jurisdiction to reopen the assessment under Sections 147 and 148, have been removed by the non obstante clause with which sub section (1) of Section 153A opens. The time-limit within which the notice under Section 148 can be issued, as provided in Section 149 has also been made inapplicable by the non obstante clause. Section 151 which requires sanction to be obtained by the Assessing Officer by issue of notice to reopen the assessment under Section 148 has also been excluded in a case covered by Section 153A. The time-limit prescribed for completion of an assessment or reassessment by Section 153 has also been done away with in a case covered by Section 153A. With all the stops having been pulled out, the Assessing Officer under Section 153A has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters, if need be.

17. Considering the facts and circumstances of the case and also applying the ratios of the above mentioned decisions, we are of the considered opinion that the Assessing Officer, has no jurisdiction to issue notice u/s 148 of the Act to reopen the assessments in respect of those six assessment years immediately preceding the assessment year in which search is conducted or requisition is made. The period under consideration falls within the exclusive domain of section 153A. In the instant case, since the assessment is made consequent to search in another case, the Assessing Officer is bound to issue notice u/s 153C and thereafter proceed to assess or reassess total income under section 153A of the Act. The Assessing Officer, instead of complying with the provisions of section 153C, proceeded with the reassessment under section 147/148 which is not applicable to search cases. Therefore, the impugned assessment order passed u/s 143(3), r.w.s. 147 of the Income tax Act, 1961 is illegal, arbitrary and without any jurisdiction. Hence, the assessment order dated 31-12-2010 passed u/s 143(3) r.w.s. 147 is quashed.”

Thus, it is clear that the Tribunal has taken a consistent view on this issue and further the Delhi Benches of this Tribunal in case of Rajat Shubra Chatterji vs. ACIT (supra) has held in para 7 as under:-

“7. On having gone through the decisions cited above especially the decision of Amritsar Bench in the case of ITO vs. Arun Kumar Kapoor (supra), we find that in that case as in the present case before us, reassessment was initiated on the basis of incriminating material found in search of third party and the validity of the same was challenged by the assessee before the Learned CIT(Appeals) and the Learned CIT(Appeals) vitiated the proceedings. The same was questioned by the Revenue before the ITAT and the ITAT after discussing the cases of the parties and the relevant provisions in details has come to the conclusion that in the above situation, provisions of sec. 153C were applicable which excludes the application of sections 147 and 148 of the Act. The ITAT held the notice issued under sec. 148 and proceedings under sec. 147 as illegal and void ab initio. It was held that Assessing Officer having not followed procedure under sec. 153C, reassessment order was rightly quashed by the Learned CIT(Appeals). In the present case before us, it is an admitted fact, as also evident from the reasons recorded and the assessment order that the initiation of reopening proceedings was made by the Assessing Officer on the basis of information received from the Directorate of Income-tax (Inv.) on the basis of search & seizure operation conducted at the premises of Rock Land Group of Cases and the documents related to the assessee found during the course of search were made available to the Assessing Officer of the present assessee. We thus respectfully following the decision of Co-ordinate Bench of the ITAT in the case of ACIT vs. Arun Kapur – 140 TTJ 249 (Amritsar) hold that provisions of sec. 153C of the Act were applicable in the present case for framing the assessment, if any, which excludes the application of sec. 147 of the Act, hence, notice issued under sec. 148 of the Act and assessment framed in furtherance thereto under sec. 147 read with section 143(3) of the Act are void ab initio. The reassessment in question is accordingly quashed. The ground No.1 is accordingly allowed.” Therefore, in conjoint reading of provisions of section 153A, 153C and 147/148 of the Act as well as a consistent view taken by this Tribunal in a series of decision cited (supra) we hold that the assessment or reassessment of income of the person other than search persons based on seized material can be only be made u/s 153C r.w.s. 153A and the provisions of section 147/148 of the Act are not applicable in such cases. No contrary decision has been brought to our notice. Accordingly, we hold that initiation of proceedings u/s 147/148 by the AO to reassess the income is illegal being without jurisdiction and consequently the reassessment order passed u/s 147 r.w.s. 143(3) is also illegal and void abinitio and is liable to be quashed.

Madan Mohan Gupta and his wife Smt. Shashi Kala Gupta were the shares of M/s Kalyan Buildmart Pvt. Ltd. which owned the land in question. There may be a case of under valuation of shares and understatement of consideration paid by the assessee however, it is not a case of purchase of land. The purchase consideration of shares was accepted by the AO while completing the assessment u/s 143(3) r.w.s. 153A and therefore, the AO is precluded to reassess the income on the basis of non existing transaction of purchase of land. Further, the AO himself was not sure about the escapement of income and assess the income in the hands of the assessee only on protective basis. The very basis of invoking the provisions of section 147/148 is contrary to the facts and record that it was a transaction of purchase of shares of M/s Kalyan Buildmart Pvt. Ltd. and not purchase of land owned by the said company. Even if the purchase consideration of share is under stated the reasons for reopening do not state so and therefore, the reopening on the basis of non existing transaction is not permitted. Once, the transaction of purchase of shares was revealed during the assessment u/s 143(3) r.w.s. 153A and the same was considered and accepted by the AO then the AO is not permitted to reopen the assessment to review its order as it would amount to change of opinion. The Hon’ble Madras High court in case of CIT vs. Remedies Ltd. (Supra) has held in paras 10 to 12 as under:-

“10. We find from the order of the Tribunal and also on the facts as has been culled out from the assessment order in question that there is no element of failure to disclose fully and truly all material facts necessary for assessment. Therefore, there was no justification for the department for invocation of proceeding under Section 147 r/w 148 of the Income Tax Act.

is "tangible material" to come to a conclusion that there was an escapement of income from assessment. For better appreciation, the relevant portion of the said decision reads as follows:

"6. On going through the changes, quoted above, made to section 147 of the Act, we find that, prior to the Direct Tax Laws (Amendment) Act, 1987, reopening could be done under the above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act (with effect from 1st April, 1989), they are given a go-by and only one condition has remained, viz., that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1st April, 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, section 147 would give arbitrary powers to the Assessing Officer to reopen assessments on the basis of "mere change of opinion", which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review ; he has the power to reassess. But reassessment has to be based on fulfilment of certain preconditions and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, the Assessing Officer has power to reopen, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words "reason to believe" but also inserted the word "opinion" in section 147 of the Act. However, on receipt of representations from the companies against omission of the words "reason to believe", Parliament reintroduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the Assessing Officer. We quote hereinbelow the relevant portion of Circular No. 549 dated October 31, 1989 ([1990] 182 ITR (St.) 1,29), which reads as follows :

"7.2 Amendment made by the Amending Act, 1989, to reintroduce the expression 'reason to believe' in section 147.—A number of representations were received against the omission of the words 'reason to believe' from section 147 and their substitution by the 'opinion' of the Assessing Officer. It was pointed out that the meaning of the expression, 'reason to believe' had been explained in a number of court rulings in the past and was well settled and its omission from section 147 would give arbitrary powers to the Assessing Officer to reopen past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989, has again amended section 147 to reintroduce the expression 'has reason to believe' in place of the words 'for reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new section 147, however, remain the same." (emphasis supplied) 18. Similar view has been taken by this Court in the decision reported in Commissioner of Income-tax v. Cholamandalam Investment and Finance Co. Ltd. [2009] 309 ITR 110 , wherein it was held as follows:

"In those circumstances, it could not be regarded that the assessee had failed to disclose fully and truly all material facts relevant for the assessment. As the facts revealed that the Assessing Officer who made the original assessment order has called for all the details regarding the case where 100 per cent. depreciation were claimed and the assessee had furnished the invoices for purchase of assets on which 100 per cent. depreciation were claimed, there was no failure on the part of the assessee and if at all there was any failure, according to the Commissioner of Income-tax (Appeals), it was on the part of the Assessing Officer, who made the original assessment without going behind the nature of the transactions accepting the details furnished by the assessee. The Tribunal also extracted that portion of the order and found on the fact that there was no fault on the part of the assessee so as to enable the Department to reopen the assessment as the proviso to section 147 of the Income-tax Act would squarely apply to the case of the assessee. We find no infirmity in the order passed by the Tribunal. Hence, the appeal is dismissed."

19. In an identical circumstances, a learned single Judge of this Court considered the issue in the decision reported in Fenner (India) Ltd. v. Deputy Commissioner of Income-Tax [2000] 241 ITR 672 (Mad), wherein, it was observed as follows: "The pre-condition for the exercise of the power under section 147 in cases where power is exercised within a period of four years from the end of the relevant assessment year is the belief reasonably entertained by the Assessing Officer that any income chargeable to tax has escaped assessment for that assessment year. However, when the power is invoked after the expiry of the period of four years from the end of the assessment year, a further pre-condition for such exercise is imposed by the proviso namely, that there has been a failure on the part of the assessee to make a return under section 139 or in response to a notice issued under section 142 or section 148 or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year. Unless, the condition in the proviso is satisfied, the Assessing Officer does not acquire jurisdiction to initiate any proceeding under section 147 of the Act after the expiry of four years from the end of the assessment year. Thus, in cases where the initiation of the proceedings is beyond the period of four years from the end of the assessment year, the Assessing Officer must necessarily record not only his reasonable belief that income has escaped assessment but also the default or failure committed by the assessee. Failure to do so would vitiate the notice and the entire proceedings. The relevant words in the proviso are, ". . . . unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee ... . ." Mere escape of income is insufficient to justify the initiation of action after the expiry of four years from the end of the assessment year. Such escapement must be by reason of the failure on the part of the assessee either to file a return referred to in the proviso or to truly and fully disclose the material facts necessary for the assessment. Whenever a notice is issued by the Assessing Officer beyond a period of four years from the end of the relevant assessment year, such notice being issued without recording the reasons for his belief that income escaped assessment, it cannot be presumed in law that there is also a failure on the part of the assessee to file the returns referred to in the proviso or a failure to fully and truly disclose the material facts. The reasons referred to in the main paragraph of section 147 would, in cases where the proviso is attracted, include reasons referred to in the proviso and it is necessary for the Assessing Officer to record that any one or all the circumstances referred to in the proviso existed before the issue of notice under section 147.... . . . . . . . . . . . . . . . . . . . . The duty of an assessee is limited to fully and truly disclosing all the material facts. The assessee is not required thereafter to prepare a draft assessment order. If the details placed by the assessee before the Assessing Officer were in conformity with the requirements of all applicable laws and known accounting principles, and material details had been exhibited before the Assessing Officer, it is for the Assessing Officer to reach such conclusions as he considered was warranted from such data and any failure on his part to do so cannot be regarded as the assessee's failure to furnish the material facts truly and fully. Any lack of comprehension on the part of the Assessing Officer in understanding the details placed before him cannot confer a justification for reopening the assessment, long after the period of four years had expired. On the facts of this case, it is clear that the escapement of income, if any, on this account is not on account of any failure on the assessee's part to disclose the material facts fully and truly. The notice issued by the Assessing Officer in exercise of his power under section 147, therefore, cannot be sustained. As the error here is one of jurisdiction it is not necessary for the assessee to have recourse to the remedies by way of appeal, revision, etc. It is well settled that when a jurisdictional error is brought to the notice of this court such errors are capable of being corrected by this court in exercise of the court's powers under article 226 of the Constitution of India. The Supreme Court in the case of CIT v. Progressive Engineering [1993] 200 ITR 231 (sic), held that when all the relevant facts were before the court and the law is clear on the subject, it is the duty of the High Court to interfere. That was also a case where the proceedings were sought to be initiated against the assessee under section 147 of the Act.

20. In the case of ICICI Securities Ltd . v. Assistant Commissioner of Income Tax 3(2), Mumbai, the Bombay High Court vide order dated 22.08.2006 in W.P.No.1919 of 2006, while dealing with the issue on the reopening of assessment, held as follows:

"7. In the facts of the present case, there is nothing new which has come to the notice of the revenue. The accounts had been furnished by the Petitioner when called upon. Thereafter the assessment was completed under section 143(3) of the Income Tax Act. Now, on a mere relook, the officer has come to the conclusion that the income has escaped assessment and he is of course justified in his analysis. In our view, this is not something which is permissible under the proviso to section 147 of the Income Tax Act which speaks about a failure on the part of the assessee to make a proper return. In the present case, no such case is made out on the record.

21. The above-said view of the Bombay High Court was affirmed by the Supreme Court in Civil Appeal No.5960 of 2012.' 12. In the light of the above, we hold that when the Assessing Officer had failed to record anywhere his satisfaction or belief that the income chargeable to tax had escaped assessment on account of the failure of the assessee to disclose truly and fully all material facts necessary for assessment. On the contrary, it was the Assessing Officer, who failed to consider the materials placed before him at the time of regular assessment for which the assessee cannot be found fault with. Therefore, the notice issued under Section 147 of the Income Tax Act beyond the period of four years was wholly without jurisdiction and cannot be sustained. Accordingly, for the reasons stated above, the substantial question of law is answered in favour of the respondent/assessee and against the appellant/Revenue.” Thus, when the AO has not recorded in his satisfaction or believe that the income chargeable to tax has escaped assessment on account of failure of the assessee to disclose fully and truly all material facts necessary for assessment then the notice issued u/s 148 beyond the period of 4 years was without jurisdiction and is not sustainable. Hon’ble Bombay High Court in case of Sitara Diamond (P.) Ltd. vs. DCIT (supra) while considering the validity of notice issue u/s 148 after 4 years has held in para 6 as under:-

“6. We have considered the rival submissions. By the impugned notice dated 20 June 2011, the assessment for Assessment Year 2005-06 is sought to be reopened beyond a period of four years of the end of the relevant assessment year. The condition precedent to the exercise of the jurisdiction to reopen an assessment beyond a period of four years as spelt out in the proviso to Section 147 is that there ought to be a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for that assessment year. In the present case, the sole basis on which the assessment proceedings were sought to be reopened is the order which has been passed on 5 July 2011 for Assessment Year 2007-08. In that order, according to the Revenue, it has been held that the assessee acts as a mere facilitator and is not a manufacturer so as to entitle it to the deduction under Section 10A. The issue, however, before the Court, is as to whether that can form the basis of the reopening of the assessment beyond a period of four years. The reasons which have been disclosed by the Assessing Officer do not set out as to what facts the assessee had failed to fully and truly disclose. Even a prima facie reference to the basis on which it is sought to be inferred that there was a failure to disclose all material facts has not been set out in the reasons. In that view of the matter, we are of the view that the primary jurisdictional requirement for reopening the assessment beyond a period of four years has not been fulfilled in this case. Since the order passed by the CIT (Appeals) for Assessment Year 2007-08 has been passed after the assessment for Assessment Year 2005-06 has been sought to be reopened by the notice dated 29 June 2011, we have, for the purposes of this discussion, kept that circumstance out of consideration. We have come to the conclusion that the Assessing Officer having failed to establish that there was a failure on the part of the assessee to disclose fully and truly all material facts for Assessment Year 2005-06, the reopening beyond a period of four years is clearly not valid. There was a finding of fact by the Assessing Officer in the assessment order for Assessment Year 2005-06 that the business activity of the assessee is manufacturing of jewellery in a Special Economic Zone. That finding, as the assessment order notes, was based upon a consideration of the facts of the case and upon examining the contentions of the assessee.”

When the AO has failed to set out in the reasons recorded as to what facts the assessee has failed to disclose fully and truly then the reopening after 4 years is invalid being without jurisdiction. We do not wish to multiply the precedent on this issue though relied upon by the ld. AR of the assessee. Accordingly, in the facts and circumstances of the case and in view of the various decisions as stated above we hold that the reopening after 4 years from the end of the assessment year is bad in law being without jurisdiction and consequential assessment is invalid, accordingly, the reassessment order is quashed. Since, we have quashed the reassessment order itself, therefore, we do not propose to go into the other grounds raised by the assessee.”

The reasons recorded by the Assessing Officer in reopening the case of the assessee are identical to the case of Shri Navrattan Kothari in dated 13.12.2017 wherein under identical set of facts the entire reassessment proceedings were quashed by the Tribunal. Further the Assessing Officer has proceeded in the case of assessee as well as in the case of Shri Shankar Lal Saini and Shri Kanhiya Lal Saini on the premises that the assessee alongwith his two sons have purchased the land in question by paying on money as found recorded in the seized material, which was explained by Shri Madan Mohan Gupta. However, no tangible material is placed on record to support the action of the AO warranting reopening of the assessee’s case. The AO did not rebut the appellant’s contention that nothing over and above the amount recorded in the registered sale deeds was paid by bringing necessary details. The unsubstantiated material found in the diary in possession of Shri Madan Mohan Gupta cannot be considered in the hands of the assessee as a conclusive evidence so as to reopen the assessment and make additions towards unexplained investment in purchase of land. Undisputedly, no other material suggesting payment of higher amounts was recovered during the search. It is trite law that burden is on the revenue to prove that the price had been under stated and no addition is possible without any inquiry. In this case, there is no cogent material to support the reopening of the assessment within the meaning of section 147 and that the appellant has actually paid higher amount than that recorded in the registered sale deed and the AO did not conduct any inquiry to bring some material to corroborate the notings found in the diary allegedly contained dealings in respect of certain properties purchased the assessee, except relying on the statement of Shri Madan Mohan Gupta. Therefore, following the earlier order of this Tribunal in the case of Shri Navrattan Kothari Vs. ACIT (supra), wherein exactly same facts were involved and after considering the various judicial pronouncements on the issue held the issue of notice u/s 147 without jurisdiction, we hold that the reopening of the assessment after four years from the end of the assessment year under consideration and also with reference to the provisions of section 151 is not valid and the same is quashed.

ITA NO. 728/JP/2019 A.Y. 2007-08 and A.Y. 2007-08.

7. The issues involved in these appeals are identical to issues raised in the appeal in for the assessment year 2007-08 in the case of assessees father. We have decided the appeal in ITA No. 238/JP/2020 wherein we

46 728/JP/2019 & 06/JP/2021 Shri Madho Lal Saini and Others. have quashed the proceedings for reopening of the assessee’s case. Since the facts involved in these appeals are exactly similar, therefore, the decision arrived at in ITA No. 238/JP/2020 are squarely applicable in these cases also. Thus following the view taken in ITA No. 238/JP/2020, we quash the reopening of the case of the present assessees. 8. In the result, the appeals of the assessees are allowed.

Order pronounced in the open court on 6/03/2023.

Sd/- Sd/- ¼ jkBkSM+ deys'k t;arHkkbZ ½ ¼lanhi xkslkbZ½ (RATHOD KAMLESH JAYANTBHAI) (SANDEEP GOSAIN) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 6/03/2023. Das/ आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Shri Madho Lal Saini, Shri Shankar Lal Saini and Shri Kanhiya Lal Saini, Jaipur. 2. izR;FkhZ@ The Respondent- ITO Ward-2(3) & ITO Ward 7(1), Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File {ITA No. 238/JP/2020, 728/JP/19 & 06/JP/2021}